C64 power supply is based on a linear DC regulator. These power
bricks aren't as reliable as switching ones, but they can work well when kept
cool. Unfortunately many of C64 power supplies are also sealed with epoxy.
This epoxy will expand when heat comes from regulator, pushing regulator's pins
apart from board. Usually the first wire which disconnects is the ground wire,
which gives catastrophic results: the +5V voltage rises to a peak capacitor
voltage directly from transformer, diode bridge and capacitors - about 11.2V,
destroying chips inside C64.

Zener Diode D1 monitors DC level. If it exceeds its voltage and
the voltage of opening Q1, it'll close Q2 and open the relay, disconnecting
dangerous power line from the computer. Red LED will light up. Don't worry about
too high voltage on red LED - 470 Ohms is enough for 11V.

Use a good, 1,5 Amp relay - do not even think of these small
chip-height relays or even smaller reed-switch/contactron-based relays (a glass tube with
contacts wound with coil).

It's normal that it'll blink quickly in start-up of a power
supply, because relay must get its position.